The opinion of the court was delivered by: HOWARD G. MUNSON
Presently before the court are post-trial motions by plaintiffs Abdallah Bseirani, AGB International Management Corporation and Pittcon Preinsulated Pipes Corporation ("plaintiffs" or "Bseirani parties"), and defendant George T. Mahshie. The motions were presented orally to the court on November 9, 1994.
The instant action stems from a failed business relationship between Ismail Abou-Khadra and Abdallah G. Bseirani involving the manufacture and sale of heating, ventilation and air conditioning equipment and preinsulated pipes. The relationship commenced in late 1978 when the two were introduced by defendant George T. Mahshie, and continued until the early 1980's when the parties had a falling out over the operation and control of two companies, Contractors Services Establishment ("CSE") and Saudi Preinsulated Pipes Industries ("SPPI").
At the core of this case are Bseirani's allegations that Mahshie and Abou-Khadra defrauded him out of his forty-nine percent equity interest in CSE and SPPI. In the late 1970s, Bseirani became interested in selling heating, ventilating and air conditioning equipment in Saudi Arabia, but as an American citizen was prohibited under Saudi law from doing so unless sponsored by a Saudi entity. In November 1978 George Mahshie introduced Bseirani to Ismail Abou-Khadra, a Saudi citizen. Abou-Khadra established CSE, a Saudi Arabian corporation, in 1975. In 1978 CSE was dormant, and Abou-Khadra expressed an interest in allowing Bseirani to conduct his import business under its auspices. Bseirani and Abou-Khadra agreed to operate CSE as joint owners, and did so until December 1983, when Abou-Khadra allegedly confiscated the company from Bseirani.
Meanwhile, in 1979 Bseirani discussed with Abou-Khadra the possibility of operating a manufacturing plant within Saudi Arabia. Again limited by Saudi business laws, Bseirani agreed to allow the facility to be listed in Saudi Arabia as a sole proprietorship under Abou-Khadra's name. The business was named SPPI. Abou-Khadra and Bseirani orally agreed, after extensive negotiations often facilitated by Tony Deeb, to an initial one million dollar capitalization of SPPI. Bseirani asserts that each agreed to hold a forty-nine percent equity interest in SPPI, with Mahshie holding the remaining two percent.
Mahshie denies having any ownership interest in the company.
According to Bseirani, he gave a $ 500,000 check to Tony Deeb, who passed it to Abou-Khadra. The check represented Bseirani's ownership interest in SPPI, and was deposited into SPPI's account in February, 1982. Later that year, Bseirani initiated steps to formalize his interest in SPPI because Abou-Khadra never provided him with a receipt indicating that the $ 500,000 was his capital contribution to the company. By the time the first shipment of manufactured goods issued from SPPI in November 1983, the relationship between Bseirani and Abou-Khadra had significantly deteriorated. Bseirani claims that Abou-Khadra refused to honor Bseirani's continued requests to formalize Bseirani's interest in SPPI. Instead, Abou-Khadra dismissed Bseirani as general manager of SPPI, and revoked his work visa, forcing Bseirani to leave Saudi Arabia.
On March 7, 1984, after further negotiations, Bseirani and Abou-Khadra executed two release agreements. The first agreement purported to satisfy all potential legal claims between the parties. The second set forth the terms of the continued operation of SPPI. By October 1984, however, whatever cooperative spirit these releases signified had dissipated. Claiming that Bseirani failed to abide by the terms of the second agreement, Abou-Khadra directed Mahshie to withhold payment to Bseirani due under the first agreement.
Bseirani brought an action against Mahshie in state court for the release of the funds. Abou-Khadra then commenced suit in this court against a variety of defendants, including Bseirani and Mahshie. The state court action was settled, and Bseirani asserted seventeen counterclaims against Abou-Khadra, Mahshie and Deeb in the federal action.
The federal jury returned a general verdict supplemented by answers to eighty-eight special interrogatories. The jury found against Abou-Khadra on his claims against Bseirani, and for Bseirani on a number of the causes of action in his counterclaims. The jury also found for Bseirani on his claims against George Mahshie for fraud, conspiracy to defraud, civil RICO violations, breach of a duty of honesty and fair dealing, breach of fiduciary duty, conversion, and legal malpractice. On appeal, the Court of Appeals for the Second Circuit reversed and remanded for a new trial on Bseirani's claims against Mahshie. See Abou-Khadra v. Mahshie, 4 F.3d 1071 (2d Cir. 1993)
A second trial commenced on October 3, 1994. Instead of seventeen causes of action, Bseirani pursued only four: state common law claims of fraud and malpractice, and two violations of the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 28 U.S.C. 1962(d).
Rather than eighty-eight special interrogatories, the jury was provided with a special verdict form consisting of eighteen questions, prepared and agreed to by the parties. The jury answered the eighteen questions as follows:
1. Did defendant Mahshie conspire to defraud, and therefore defraud, Abdallah B. Bseirani into believing that he was the true owner of CSE and/or the owner of a 49% interest in SPPI?
2. If your answer to the previous question is "yes", do you find that plaintiffs suffered damages which were proximately caused by the fraud?
3. If your answers to questions "1" and "2" above are "yes", state the amount of damages that you find resulted from the fraud.
Answer: Yes. $ 475,000.00
5. Did defendant Mahshie conspire with Ismail Abou-Khadra to acquire from Abdallah G. Bseirani a 49% interest in SPPI through a pattern of racketeering activity?
6. If your answer to question "5" is "yes", did plaintiffs suffer damages which were proximately caused by the conspiracy?
7. If your answers to questions "5" and "6" are "yes", what amount of damages did plaintiffs suffer as a result of the conspiracy?
8. Did defendant Mahshie conspire with Ismail Abou-Khadra to conduct the operation of the Bseirani/Abou-Khadra business venture through a pattern of racketeering activity?
9. If your answer to question "8" is "yes" did plaintiffs suffer damages which were proximately ...